Covid Causing Deferrals of Lease Payments: Study

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July results from Covid-19 impact study.

The Equipment Leasing & Finance Foundation reported that 95 percent of respondents in the equipment leasing industry have offered payment deferrals. The July Covid-19 Impact Survey of the Equipment Finance Industry covered July 1-11, and 77 leasing executives responded.

About three-quarters of respondents expect the default rate in 2020 to be higher than it was in 2019.

Against that backdrop, the Foundation’s July 2020 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) remained steady at 45.3, compared to the June index of 45.8. The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $900 billion equipment finance sector.

“We continue to find solutions for our customers as they traverse through the Covid crisis,” said Michael Romanowski, president, Farm Credit Leasing, in a prepared statement. “In some cases, we are providing leasing solutions to customers who have not considered leasing in the past. We expect these new relationships to continue to grow even after the pandemic has moved on.”

When asked to assess their business conditions over the next four months, 21.4 percent of respondents said they believe business conditions will improve over the next four months, down from 37 percent in June. Half said they believe business conditions will remain the same over the next four months, an increase from 18.5 percent the previous month.

About 14 percent of respondents said they believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 18.5 percent in June. Some 64.3 percent said they believe demand will “remain the same” during the same four-month time period, an increase from 44.4% the previous month.

None of the respondents evaluate the current U.S. economy as “excellent,” unchanged from the previous month. About four in 10 evaluate the current U.S. economy as “fair,” up from about two in 10 in June. Some 60.7 percent evaluate the economy as “poor,” down from 77.8 percent last month.

One-quarter of respondents says they believe that U.S. economic conditions will get “better” over the next six months, a decrease from 55.6 percent in June. Some 18.5 percent say they believe economic conditions in the U.S. will worsen over the next six months, unchanged from the previous month.

Source: The Equipment Leasing & Finance Foundation